Do You Have to Track Employee Hours? Nonexempt, Exempt and Salaried Employees Explained

Yes, for nonexempt employees the FLSA requires you to track hours worked every day and every week, and being salaried does not change that. You are generally not required to track hours for exempt employees, although you must be able to prove that the exemption applies. Whether someone is exempt depends on salary and duties, not on a job title or on whether they are paid by the hour.

This article walks through the three groups that cause the most confusion: hourly employees, salaried nonexempt employees and exempt employees. It also covers state rules, remote workers and what to do if you are unsure. This is general information, not legal advice, so check with counsel or your state labor department when the answer depends on your facts.

Hourly employees must be tracked

Almost every hourly employee is nonexempt, which means the FLSA applies in full: minimum wage of $7.25/hour (higher in many states and cities) and 1.5 times the regular rate for hours over 40 in a workweek. To prove you paid correctly, you must record the hours worked each workday and each workweek, as described in FLSA timekeeping requirements.

The law does not require a particular method, but it does require accuracy. Estimating hours from a posted schedule is not tracking, because breaks, late arrivals, early departures and extra work all change the real number.

Salaried does not mean exempt

One of the most common misconceptions is that paying a salary removes the duty to track time. It does not. A salaried employee is exempt only if the person meets both a salary basis and salary level test and a duties test. If either one fails, the employee is nonexempt and is owed overtime for every hour over 40.

Example: you pay an office coordinator $800.00 per week and treat her as exempt. If her duties are mostly clerical and she does not meet an exemption test, she is nonexempt. In a week when she works 46 hours, if the $800.00 was meant to cover 40 hours, her regular rate is $800.00 / 40 = $20.00, and the 6 overtime hours add 6 x $10.00 = $60.00 for the week. Without time records you cannot show what was worked, and she can claim more.

Another practical point is that pay method and exemption are separate questions. An employee paid a flat salary but who fails the duties test is still nonexempt, and an employee paid hourly is almost never exempt, because the salary basis test requires a predetermined amount that is not reduced for the quantity of work.

Who is exempt and what you must still show

The federal white-collar exemptions require a salary of at least $684 per week ($35,568 per year), and highly compensated employees must earn at least $107,432 per year. The 2024 DOL rule that would have raised those numbers was vacated by a Texas federal court in November 2024, and the DOL removed it from the CFR effective May 15, 2026, so the 2019 levels apply again. Several states set higher thresholds, so verify yours.

Exempt employees are not subject to the hours-worked records rule, but you should keep documentation of their salary, pay basis and duties. We go deeper on the tests in exempt vs. nonexempt employees.

State laws can add tracking duties

Some states require employers to record more than the federal minimum, such as meal period punches or itemized wage statements, and a few require records for certain exempt employees too. California, New York and Washington are the usual examples, but many other states have their own rules.

If your state is stricter than the FLSA, you follow the stricter rule. A short call to your state labor department or your employment attorney is cheaper than a misclassification claim.

Remote workers and employees who work from anywhere

The tracking duty follows the employee, not the location. A nonexempt employee working from a home office still has to be recorded, and the employer is responsible if the person works unrecorded hours that the employer knew or should have known about. The rule is that work you suffer or permit counts as hours worked, even if you did not ask for it.

That is why a clear process for clocking in and out, for correcting missed punches and for approving overtime matters more for remote teams, not less.

A good policy for remote staff states that all time must be recorded, that overtime needs approval and that the employee must report any work done outside normal hours. Training managers to avoid sending messages late at night to nonexempt employees also reduces the risk of unrecorded work.

A simple decision path

If you are not sure whether to track someone, work through these steps:

1. Is the person paid at least the federal salary level, or the higher state level that applies to them?

2. Is the pay a true salary that is not reduced for variations in the quality or quantity of work?

3. Do the actual duties meet an exemption, such as executive, administrative, professional or another category?

If the answer to any of these is no, treat the employee as nonexempt and track hours. If you are unsure, tracking is the safer choice, because the cost of recording time is small compared with the cost of a lost classification dispute.

The risk of not tracking

If a nonexempt employee later claims unpaid overtime and you have no time records, a court will usually accept a reasonable estimate from the employee. Back wages can be doubled through liquidated damages, and the lookback period is 2 years, or 3 years for willful violations. We cover the numbers in wage and hour lawsuits and back pay.

Even employers who classified someone correctly can lose a dispute simply because they cannot prove the hours. Tracking is inexpensive insurance.

How SimpleWorkshift Helps You Track the Right Employees

SimpleWorkshift lets you set up work schedules per employee and have everyone clock in and out from the iOS or Android app or the web, with GPS-verified time entries. Managers get a real-time view of time entries and exceptions, so late punches and long days show up while they can still be fixed.

Automatic overtime calculations, a time bank, PTO and absence tracking, and custom reports keep the records for your nonexempt staff in one place, whether you run a retail store, a clinic, a manufacturing floor or a remote team. Start the 30-day free trial at simpleworkshift.com, with no contracts and the option to cancel anytime.